Posted
by
timothy
on Sunday September 11, 2011 @10:19PM
from the does-that-even-match-the-warranty-period? dept.

angry tapir writes "A Virginia woman was sentenced Friday to five years in prison for leading a 'sophisticated' conspiracy to import and sell counterfeit Cisco Systems networking equipment. In addition to the prison time, Judge Gerald Bruce Lee of U.S. District Court for the Eastern District of Virginia also ordered Chun-Yu Zhao, 43, of Chantilly, Virginia, to pay US$2.7 million restitution and a $17,500 fine."

Well, it IS entirely possible that these "counterfeit" things came from the exact same production line made by the exact same people that make the Cisco gear. Only they didn't sell it to Cisco, which then would have slapped their sticker on and sold it for three times the price, but just conterfeitet the sticker and sold it for double.

After reading this article, some comments and a bit of research on Google I wouldn't be surprised if I unknowingly bought and sold fake Cisco at my last place of work (who have since gone under).

It was the only job I've had that involved dealing with "The Channel", despite working in both sales then purchasing there I'm still not too clued up about that side of things (it's boring, as you don't get to play with the things you buy) and I'm still quite niave about what goes on.

We were a Cisco Select partner who frequently got invited along to our local Cisco offices as they were trying to push us more and more towards Cisco SMB stuff, our customers included local police, local government, schools, colleges and installers. We had accounts with Ingram Micro, Azlan/Computer 2000, Micro P, but we very rarely bought Cisco from them. We usually ended up buying "grey market" stock from brokers which was often cheap enough for us to add our mark up and still undercut the distributors, but the thing I'm really wondering about is the dirt cheap "OEM" GBICs and SFPs we used to buy which we'd normally put at least a 300% mark up on and still be cheap, these were one of the few things that weren't stock dependant, our supplier for them always had a good stock of them and they were always dirt cheap so we always had a reasonable stock of them.

At the time I never thought about the possibility that anything we sold was counterfeit, but looking back I suspect at the very least the GBICs and SFPs were, none of our customers openly questioned why a small company was being able to undercut the likes of Ingram Micro, with some of our closer customers it was a case of "yeah, it's grey stock, but we pass the savings on to YOU", but most of it was don't ask don't tell.

We were just a small business wanting to play with the big boys, we'd get pricing support from Cisco for big jobs, but we'd tend to take their quotation, remove the prices, send it to the brokers and say "see what you can do" and they'd pretty much always undercut Cisco so for a struggling company who might go under anyway the gamble of buying "grey stock" that could possibly end up being counterfeit will generally pay off.

Its worse than that. A company orders 10,000 units of product X. You have to manufacture 11,000 units to account for "spoilage" loss, damage in shipment, and the occasional snatch off the freighter to take home to friends and family. The result is you end up with 800 extra at the end of shipment so you either convince the buyer to also purchase the surplus or you sell them to someone who will put a cheapo label on it and sell at wholesale prices.

In fact, if you can discover the path of production, its one of the very best ways to get a great deal. I picked up a $1,700 guitar, for $150 and the only difference was minor changes in the scroll work to hide the intended brand, and less expensive hardware. Spent a couple hundred on superior hardware and had an exceptional instrument worth over five times what I paid for it.

The mistake here was trying to get top dollar as a counterfeit. Now a days with the draconian laws that corporations have gotten passed, its a wonder its not a capital offense.

It has been some years since most of the money made from "intellectual property" actually went to the people who created the innovation or idea. Today, almost ALL of the money made from intellectual property goes to someone who had absolutely nothing to do with creating it. That is a broken system.

I understand that it's very easy to believe that the way things are is the only way things can be, but it's simply not true.

And if we're going to keep this extra layer of bureaucracy that is weighing down world economies, we had better figure out a way to actually make it mean something besides an easy way to siphon wealth from the people who make to the people who own.